TransUnion Q1 2020 Industry Insights Report

The COVID-19 situation is changing both in scope and scale as we continue to observe the impacts of social measures on the economy. As a result our forecast for 2020 has been revised. TransUnion now anticipates that overall non-mortgage delinquency in Canada will increase to 6.9% by Q3 2020. Canadian consumers were already feeling the pressure of debt coming into the crisis, with non-mortgage delinquency rates up 39 bps from the previous quarter to 5.75% marking the highest they have been since 2015.

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TransUnion’s current scenario projects that overall non-mortgage delinquency in Canada will peak at 6.9% in Q3 2020 before gradually drop back down to 6% by Q1 2021. For context, non-mortgage delinquency rates in Q1, which straddled pre- and post-COVID worlds, were 5.75%, and concluded Q4 2019, at 5.61%

90+Day Delinquency Rate YoY Changes for Non-Mortgage Loans

90+Day Consumer Delinquency Rate

Canadian credit consumers were feeling the pressure of debt coming into the COVID-19 crisis. Overall non-mortgage delinquency rates were up 39 bps from the previous quarter to 5.75%, marking the highest they have been since 2015. This increase was likely fueled by the impact of a higher cost of debt combined with plummeting oil prices and a cooling economy.

“As unemployment reaches levels not seen in several years, it’s important to take a step back and reassess how COVID-19 will impact the consumer credit market in the coming quarters”

- Matthew Fabian, Director, Research and Industry Insights

Average Consumer Balance, by Product*

Forcast

*Represents the average balance held by a consumer across each type of product (consumers can have multiple instances of same product)

Overall consumer non-mortgage debt balances remained relatively stable, dropping 1.3% to $29.6K and nearing a two-year low, as consumers may have been trying to deleverage in the face of higher interest rates on high credit balances.

Matthew Fabian

“Consumers may have been feeling the pressure of higher credit balances and increased interest rates and so were beginning to deleverage and pay down debts. However, some were unable to do this, which can explain in part the higher delinquency rates we saw for Q1. We do not anticipate non-mortgage balances remaining stable in the coming months due to the COVID-19 pandemic”

- Matthew Fabian, Director, Research and Industry Insights

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